If You Have to Keep it a Secret, It Probably Doesn’t Work

Two Californians who called themselves “professional astrologers” have been barred from setting up trusts for clients.  The U.S. District Court ruling comes after the pair were accused of promoting tax fraud.  They had their clients sign an “oath of privacy” that prohibited the clients from disclosing information to the IRS.  Joe Kristan at the Tax Update Blog has more.

Joe also has excellent analysis of the “oath of privacy” piece of the story:

It’s one of the mysteries of the tax world that people will buy tax planning that only works if the IRS never finds out about it.  If the stuff really works legally, then it should be no problem if the IRS knows about it, because they can’t touch you for doing something legal.  If you have to keep it a secret, that’s a pretty good sign that it doesn’t really work.